How Realistic is Your Budget?

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How Realistic is Your Budget?

I’ve talked to dozens of people about their budgets — and the majority of them tell me that they’re having a hard time sticking to their theoretical numbers.

But this isn’t necessarily a problem of willpower. Sometimes, it’s just an issue of poor planning.

You see, people often create budgets based on an idealized version of what people think they pay for. People think about groceries, fuel, rent or mortgage payments, insurance, restaurants, clothes, movies and all the other standard fare.

But people often forget about certain bills that make a big difference.

Here are a few expenses that people often leave out of their budgets — resulting in the creation of an unrealistic budget.

#1: Clothing

If you’re a shopaholic, then you’ve remembered to budget for clothing. But if you’re the type of person who doesn’t buy clothes often, you’ve probably forgotten this category entirely.

And that’s a mistake. Even if you don’t buy clothes very much, you do buy clothes sometimes — and that means you should include it in your financial planning. Even if you only shop once a year, you should estimate the amount you’ll spend annually, divide it by 12, and include that in your monthly budget.

#2: Restaurants

People often underestimate the amount they spend at restaurants. Look at your credit card statements to see what you actually spent on dining out last month. Chances are, you’re likely to spend a similar amount every month. Even if you consciously try to reduce your dining budget, you should still allocate a bigger chunk of money to this than you anticipate — especially in the beginning.

#3: Subscriptions

Did you remember to budget for your magazine subscriptions, television packages, newsletter subscriptions, and other “small” little fees? If you’re on a tight budget, feel free to cancel your magazine subscriptions — but until you process that cancellation, include this line-item in your planning.

#4: Memberships

Likewise, did you remember to budget for membership dues to professional organizations, neighborhood groups, parenting and community organizations, and other groups? Since you’re likely to only pay these bills once a year, there’s a good chance that you left this out of your budget. Take the annual fee, divide by 12, and include it in your monthly planning.

#5: Gifts and Cards

You might buy wedding gifts for your friends, birthday gifts for your nieces and nephews, holiday gifts for your extended family, friends and colleagues. You also might send holiday cards to your neighbors and associates, or thank-you gifts to your contractors, teachers and other important people in your life. Don’t forget to budget for all these little gifts and cards that you bestow throughout the year.

#6: Pet Care

Once or twice a year, you’ll need to take your dog or cat to the veterinarian for a check-up, dental cleaning, and a round of vaccinations. You also pay for food, toys, grooming items, flea treatments, kenneling or boarding, and other pet-care expenses throughout the year. This can add into the hundreds, or even the thousands, each year. Remember to include it within your budget.

Bottom line? You may spend more money than you realize. When you’re planning your budget, think about all the expenses that you cover every year — not just the ones you pay each week or month.

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